Demand for Healthful and Unhealthful Foods: Do Prices Matter on Obesity?

This study employs an error correction model (ECM) version of the dynamic AIDS model to test a hypothesis that relatively cheaper unhealthful food price is an important factor contributing to the overweight and obesity problems in the United States. We find that substitution effects between unhealthful and healthful foods are negligible and statistically insignificant. However, the fact that demands for unhealthful food being more responsive to changes in its own price and more habit persistence than healthful food provides the economic perspective that may explain and account for the prevalence of the overweight and obesity epidemic in the United States.